Success and failure were witnessed in Berlin this week. On Tuesday, the first day of the hectic multi-show schedule in Germany, I spent time with David Schneider, co-founder of the hugely successful ecommerce business Zalando.
Back in 2008, he and college friend Robert Gentz started selling flip-flops online, not really knowing what they were doing.
Today their business has a turnover of €2.2bn (£1.6bn), transactional sites for 15 European countries, more than 14 million users, 8,000 employees (including more than 3,000 at the biggest distribution centre in Europe), and is listed on the Frankfurt Stock Exchange. With a market capitalisation of €7.67bn (£5.47bn), the business’s first profit in 2014 was €82m (£58.5m). Gentz and Schneider are just 31.
Zalando, which deals with around 1,300 brands including the recently added Gap, Topshop, Miss Selfridge, New Look and Whistles, opened a UK site in 2011 but Schneider admitted that sales are relatively small. In addition to acquiring British “partners” (and a 20% stake in Cheltenham-based software company Anatwine), Zalando is hiring British talent; it told Drapers approximately 10 Brits a week are moving to Berlin to work for this fast-growing phenomenon.
A few weeks ago the company bought Bread & Butter, the insolvent trade fair that was a major mover in making Berlin the fashion destination it is today. I met Schneider and his colleagues after visiting this season’s pathetic and last manifestation of the once-stupendous B&B. Still located in the vast Tempelhof Airport building, this was a sorry excuse for a trade event, a barely alive corpse comprising just three areas of widely spaced low-budget stands from largely unknown companies. I have seen more impressive car boot fairs.
The fall from grace and power of B&B and its charismatic founder Karl-Heinz Müller will no doubt be a subject for business school students for years to come. I would class Karl-Heinz as a friend, although I have not spoken to him for over six months. He expressed displeasure at Drapers’ coverage of his difficulties of the past 12 months, but we have been nothing but even-handed (even when information from the business was unclear or non-existent).
It was very sad for me to walk round the small section of the airport terminal to see the tawdry gathering that in no way reflected B&B’s defiant slogan of being a “trade show for selected brands”. It was like finding an old friend sleeping rough in the streets.
It was weirdly poignant to see, as I left, a discarded copy of the huge coffee-table volume Müller had produced to celebrate the fair’s 10th anniversary in 2011. It has all gone downhill rapidly since that ego trip.
In an interesting sign of the times, Zalando (which played no part in this week’s travesty of a fair) intends to transform Bread & Butter into a consumer-only festival of fashion in 2016 as part of its strategy to “democratise” fashion to increase customer engagement. I can see it being a success. Elsewhere in Berlin the remaining trade events – Drapers visited six in all this week – continued without B&B’s help. I am surprised more British and Irish buyers do not make the relatively easy journey to the German capital. There is much to see.
Back home, we learn of the chancellor George Osborne’s plan to liberalise Sunday trading hours (see page 4). While perhaps more of a grocery story than a fashion one, it will be watched closely by Drapers readers. But longer hours will not put any more money into the market; it will just spread what’s there more thinly.